Norwest Raises Third Consecutive $1.2 Billion Fund in Five Years

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Norwest Venture Partners, the 55-year-old, Palo Alto, Calif.-based venture firm, has closed its third consecutive $1.2 billion fund. The group, which employs 20 investors altogether, raised the same amount in 2014, as well as in 2010.

If Norwest’s single limited partner – the banking giant Wells Fargo – likes what it sees, it’s easy to see why.

According to one of Norwest’s three managing partners, Jeff Crowe, Norwest has seen 22 of its portfolio companies exit in a liquidity event over the past 18 months. Some of those that went public include the cyber protection company FireEye; the credit marketplace Lending Club; the health care equipment company Intersect ENT; and SolarEdge, which provides solar power harvesting and photovoltaic monitoring software.

Among those of its bets that have been acquired are the satellite imaging company Skybox, which sold to Google for $500 million last year; and the data discovery and sharing platform 1010data, which sold last August to Conde Nast parent Advance for $500 million.

Indeed, despite not having to actively fundraise, Norwest appears to be hustling right alongside other traditional venture firms that have gotten out of their offices in recent years to more aggressively pursue the companies they want to fund.

For one thing, in the last couple of years, Norwest has opened a small office in New York, as well as found a home in a former bike shop in San Francisco’s South Park — a small urban park that has become home to a long list of venture firms, including True Ventures, Kleiner Perkins Caufield & Byers, and Shasta Ventures.

During a recent sit-down at that new San Francisco office, senior managing partner Promod Haque, who joined Norwest 25 years ago, also spoke convincingly about Norwest’s concerted efforts to diversify in recent years.

That means across sector — the firm backs enterprise stuff, and well as consumer Internet plays, healthcare IT, and some medical device companies. Norwest also invests across stages, including everything from seed-stage companies to so-called growth equity opportunities, which usually center on non-core-tech companies that nevertheless tech-enable different, stodgy verticals. Explained Haque of the move into growth six or so years ago: “From the time you invest in a seed-stage company or Series A to its exit is now a 7 to 10-year cycle, and that creates a challenge,” said Haque. “Growth deals provide us with the mechanism to get out in four to five years.”

Norwest spreads it bets geographically, too, with 15 to 20 percent of its capital getting directed to companies in Israel, Mumbai, and Bangalore — all places where Norwest has created outposts in the last 10 years or less. “Video conferencing is mission critical,” joked the firm’s third managing partner, Matthew Howard, as we sat around at table at the firm’s modern but simple conference room.

The firm declined to talk about its IRR with us. But asked about the expectations of Wells Fargo, Crowe says that Norwest does not invest strategically on the bank’s behalf.

“From time to time, if we see a company that’s interesting, we might have them go talk with IT folks [at Wells],” said Crowe. “Or if they see a company that’s interesting, they’ll say, ‘We think these guys are interesting. What do you think?'”

Still, Haque suggested that even those lightweight conversations can make a dent.

For example, one of Norwest’s portfolio companies is Shape Security, whose “Botwalls” guard company data from attacks by automated hacking attacks. It now counts Wells Fargo as one of its largest clients.

Photo courtesy of Norwest. Pictured from left to right, in front of its San Francisco office: managing directors Jeff Crowe, Promod Haque, and Matt Howard.